06 March 2007

A Glitch: NYSE Minor Malfunction...

AS SHAREMARKETS plunged around the world, anxious investors, big and small, sat glued to their computer screens. But the lesson learned from yesterday's market correction was that computer systems just aren't up to scratch when investor panic sets in.

The first malfunction came in New York, where a glitch triggered a sudden plunge in the Dow Jones Industrial Average. Brokers, already spooked by morning falls, could do little but watch on as, at 2pm local time, the Dow fell 200 points in seconds.

Dow Jones said its computer system couldn't handle the vast volume of trades — about 4.5 billion, double the daily average — at the New York Stock Exchange.

If you have been reading Richard A. Clarke's new "Fiction" novel, Breakpoint, the so called "Glitch" had some of us wondering:

The global village--an intricately intertwined network of technology that binds together the world's economies, governments, and communication systems. So large, so vital--and so fragile. Now a sophisticated group is seeking to "disconnect the globe"--destroying computer grids, communications satellites, Internet cable centers, biotech firms. Hard to do? If only that were so.

What is a glitch anyway? Didn't we hear that as an excuse from Virgil Gus Grissom in the "The Right Stuff".? He was pilot of Mercury-Redstone 4 ("Liberty Bell 7"), the second American (suborbital) spaceflight. Following the splashdown of "Liberty Bell 7", the hatch, which had explosive bolts, blew off prematurely, letting water into the capsule and into Grissom's suit. Grissom nearly drowned but was rescued by helicopter, while the spacecraft sank in deep water. Grissom maintained he did nothing to set off the explosives to blow the hatch. "It was a glitch!" Later evidence proved him right.

Whenever you hear the word "Glitch", what are you thinking? Human error. Or Computer error.
  1. A minor malfunction, mishap, or technical problem; a snag: a computer glitch; a navigational glitch; a glitch in the negotiations.
  2. A false or spurious electronic signal caused by a brief, unwanted surge of electric power.
  3. Astronomy A sudden change in the period of rotation of a neutron star.
In the case of the New York Stock Exchange and Liberty Bell 7 we are talking about something that could not be predicted. Maybe not something that had ever been seen before during testing or simulations. Therefore, the only answer could be a glitch. If you are a computer programmer you know exactly what happened. You know where the orders were piling up in the database ready to be tabulated when the systems processes started up again. Being down for an hour with those kind of trading volumes can pile up a few orders in the queue.

Operational Risk Management is about anticipating those occasional "Glitches" and preparing for them in advance. While you may not see the exact variant everytime you create and exercise a scenario, you recognize something similar. You get a feeling that you have seen this before, even if it was in a bad dream. As a Quiet Professional, working to mitigate risks, create a safe haven and achieve your mission, you expect that you will see a glitch today. And if you do, then you will act with confidence and speed to remedy the situation as it unfolds before you.

So you want a look into the crystal ball? As Richard Clarke says, "Sometimes you can tell more truth through fiction." Or is it?

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